So it’s true that earnings have, indeed, led to the sharp drop over the last week. But emerging markets have underperformed for the last year. Meaning there’s a bigger issue here.

Namely that America is an attractive investment again.

Think about what’s driven investors for the last few years. First, there was a fear of systemic risk. Markets were dominated by the risk-on/risk-off trade, and Treasuries were snapped up by scared investors.

Since this drove down Treasury rates, investors went on a chase for yield, plowing money into emerging markets – especially emerging markets debt. Take a look at the WisdomTree Emerging Markets Local Debt Fund (ELD) to see what I mean:

Ultimately, a fear of risk led investors to risky emerging markets investments. It sounds strange. But it actually makes sense, since the trend occurred during a time of increased pessimism about the western financial system.

There was the U.S. financial crisis, the debt ceiling debates, the election, potential European defaults, the euro crisis, LIBOR scandal… The list goes on.

Those fears made the risks attached to emerging markets seem tame and understandable.

Recall the examples of big declines I mentioned above – the Polish phone company and Gazprom. Both were big healthy dividend payers. That’s indicative of the kind of stock that these yield chasers would buy.

Every time President Trump rails against the media, he adds millions in market capitalization to The New York Times Company (NYT). So buying a few call options on NYT is virtually certain to pay off. If you’ve never traded options, fear not. I asked my senior analyst, Martin Hutchinson, to describe options so that a kindergartener would understand.